While the interior is nice, the first-floor kitchen and bath are original from the 1940s.

I was able to rent the garage to a seasoned electrician running his business through there only coming in and out to stock his truck once per day.I hope to be able to convert the second floor into an ADU as soon as Feb 2nd rolls around.

Same as the flooring .Now you could try to negotiate , but lets put you in the sellers place . 

About 3 year ago had 1st floor washroom redone everything brand new recently have noticed in the garden washroom water stains ask about any water issue was tolled no so I went to look over the washroom theres crack grout between the tub and tile where water must of been sipping threw also water damage on the vanity doors and towel rack missing was tolled not installed correctly contact my handyman looked over the damages forward the price tenants says it's not there fault I was tolled to installed splash guards help prevent from water falling out the tub but since it was not  installed from the beginning it's not tenants fault they don't want to take responsibility 

They need upgrades for sure, the floor & structure seems like the only thing that is in good condition.

The foundation has a crack where you can see they tried to put tar or flex seal over and there is heaving in the floor.

It's going to need new floors, new paint, some new doors and some drywall and doorframe repair among other things.

2 - How many floors?

The stain is so deep, it has to be replaced.7) The wood floors are scratched, so we're renting a sander to attempt to sand and poly8) All the closet doors have holes like they were kicked or punched9) All the baseboard heaters are bent10) There's two cracks in the bathroom counter. 

Complete New Roof, new MEP systems, new drywalls, new floors, everything new Lessons learned?